Tax Law 

Definition

Tax laws are defined by the relevant tax authorities and describe what rates apply for  IPI, ICMS, and ISS for different sales and purchases of goods or services. They detail which transactions are subject to the full rate, which are subject to a reduced rate, and which are exempt from the tax.

Use

Associated with each tax law is a text which might have to be printed on the nota fiscal. For IPI and ICMS, you need to print this text for transactions that are not subject to the full rate. It is not mandatory to print a tax law text for ISS, but we recommend that you print a dummy tax law, such as IS0.

The system automatically determines the tax laws in Materials Management (MM) and Sales and Distribution (SD) as follows:

·        MM

For IPI and ICMS, the system takes the tax law from the FI/MM tax code. If, however, an IPI text has been specified for the IPI rate or an ICMS text has been specified for the ICMS rate, this entry overwrites the one in the tax code.  

For ISS, if a tax law text is to be printed, the system takes this directly from the ISS tax rate table.

·        SD

The system takes the tax law from one of these sources: sales item category, customer master record, or tax exceptions. You define the sequence in which the system is to access these sources in Customizing for Financial Accounting (FI), under Financial Accounting Global Settings ® Tax on Sales/Purchases ® Basic Settings ® Brazil ® Define Sequence for SD Tax Law Determination.

You can also manually enter a text for the tax law in the sales order.

You can maintain IPI, ICMS, and ISS tax laws in Customizing for FI, by choosing the relevant activity under Financial Accounting Global Settings ® Tax on Sales/Purchases ® Basic Settings ® Brazil.